Ask The Consumerists: Should I Rent A House That Is In Foreclosure?

Reader Kelly wants to know if she should risk renting a vacation house that is in foreclosure.

Some friends and I are going to Las Vegas in December and have found a house to rent for the week we are there. We’re getting a shocking good deal, hundreds of dollars cheaper than what was listed in the original posting. When I was Googling the address, I found out that the property is listed as a foreclosure.

They’ve asked for a $400 deposit and then the payment in full 30 days prior to check in. I’ve countered by telling them I saw that the property may be in foreclosure and is it okay to pay the full amount when we get the keys. It’s kind of an awkward situation. I want to help them out, but don’t want to get burnt and have a horrible holiday.

What can we do to protect ourselves against the house being repossessed before our vacation in December? Is that even a possibility? Will putting it on a credit card make a difference if we need to fight it? Does this situation stink worse than Las Vegas casino that’s been smoked in for 50 years and should I run far far away?

Thank you,

Kelly from Canada

PS: In a side note, they’ve also asked for a 2.3% “credit card processing fee”. I thought this wasn’t allowed; is it best to take it up with the property owners or our credit card company?

We think you’ve made an excellent case for not going ahead with this rental. How much is your peace of mind worth? And you’re correct, the processing fee is not allowed for companies that take credit cards as a part of their normal business activities.

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@benbell: Agreed. Kelly, I got a suite at Circus Circus for $89 a night. I don’t how much space you need, but honestly, the hotel’s aren’t that bad. Plus, if your not careful, you could end up in a really crappy neighborhood out there. (I’m moving out there, and it’s hard to find a decent place at a decent price.) Your better off getting a hotel.

Anybody who demands payment 30 days ahead of time rather than just some sort of deposit raises red flags for me. Asking for the $400 deposit is one thing – it’s to hold you to the rental should you decide it’s not for you, etc. However, I’d be very VERY leery about paying 30 days ahead for rental home – in foreclosure or not.

@Michael: Then you wouldn’t be staying in a vacation rental. This is a *very* common practice.

A vacation rental isn’t like a hotel room. Chances are they can re-rent the room, and most make you pay for the first night anyways. If you don’t check into a vacation rental, the homeowner is out a whole week’s rent.

A few dollars here or there isn’t worth the possible headaches…odds are good that the money saved isn’t that significant anyhow since I’m assuming you’re splitting the cost of the rental with your cohorts…I’d just go for a normal place!

This is one of those situations where if you have to ask teh internets whether or not you should do something, know you really shouldn’t do it. Go with your gut. You would be foolish to pay in advance in a situation like this and risk ruining your vacation.

I was in Vegas a few weeks ago and I saw a few good deals on my way in that I wish I’d known about earlier. Specifically, check out the South Point hotel. They’re 3-4 miles south of the strip on Las Vegas Blvd and had a big banner advertising $69/night sunday-thursday. Also, there’s a motel that was on the south end of the strip (I don’t recall the name, unfortunately, but I think it was on Vegas Blvd by Warm Springs) that was advertising weekly rates of something like $300 or $400 for what is essentially a furnished 2 bed condo. There are also some cheaper hotels downtown (which, IMHO, is more entertaining than the strip, anyway).

I don’t what vacancy is like in Las Vegas. I’d say, if you can get them to agree to no payment till you arrive and get the keys, go for it. But that also means you may show up in Vegas with no place to stay. If there are a lot of places that aren’t booked at that time, and you don’t mind being flexible, you might be just fine. But I’ve never been to Vegas, so I have no idea what vacancy would be like when you get there.

Ummm… while I don’t do foreclosures in Nevada, I do do them in New York. If the property is in foreclosure, depending on where it is in the process, it is essentially for sale – to someone other than you are renting from. While it would be horrible to lose your deposit, it would be even worse to be in the middle of your vacation when the property is sold and the new owners come to take possession. You are not doing the people renting it a favor – you’re getting scammed.

You were able to find out that it was being foreclosed on rather easily. It could also be that this guy has no connection to the house and found out that the house was being foreclosed, found it abandoned, changed the locks, and *bam* now he’s got a rental! The terms don’t sound legit at all. Stay far away!

A guy out here in SoCal defrauded many families out here with a rental scam. He took down payments from about two dozen families on a home rental, and then beat it out of Dodge with all their cash. Come move-in day, there was a line of U-hauls to get into the neighborhood.

@FightOnTrojans:
Heck, you wouldn’t even need to change the locks! Just look up the place on the foreclosure list and start listing it on Craigslist. In fact, you could do this with any given address. If you want to get clever, you could mail people keys as soon as their deposit check clears (of course that would open you up to Federal Mail Fraud charges),

If the house is in foreclosure now it will likely go to sale prior to the Christmas Holidays. It really depends on when the NOD was recorded (beginning the foreclosure process). NV has a fairly quick foreclosure process, taking about 120 days, sometimes a bit less (but not much due to statutes). While some places are backlogged due to the massive rise of foreclosures NV is not one of them, mostly due to the process not needing to go through the court system. Really not worth taking the risk just to save a little bit of money.

A piece of my law practice is based on dispossesory actions, that is, my clients are banks who have gotten homes back via foreclosure and now want the tenants out of the house. I go to court and work out a deal with the tenants to get them out. usually I give them 2-3 weeks to make arrangements to move, or if they are trying to work out a deal with the bank to re-enter, I can do that.

Unfortunately, a large part of what I deal with are tenants who are renting the properties that have already been sold and in most cases, they are unaware that a home is in foreclosure until they show up at the hearing that kicks them out of the home.

In several instances, renters have entered into leases AFTER the home has been sold on the courthouse steps. And they’ve been diligently been paying rent, only to be told that the Sherriff’s office will be there in 7 days to throw their crap on the front lawn and change the locks.

The point of this rambling is that you have no way of knowing that in the middle of your stay, a bunch of deputies are going to show up, pop the locks of the house and throw your asses out on the street.

I don’t understand how a $400 deposit and then the full payment (which seems like a substantial amount for rent, and not like $100 which wouldn’t be normal for renting a house) is less expensive than a hotel that’s a little farther away from the strip, if that’s where they’re staying. What part of “house in foreclosure” seems like an okay idea?

@IHaveAFreezeRay: The person seems to want to rent the home for a week which would include all utilities and may be for a family or such that is not easily accomodated in a single hotel room or even suite.

These are often found in vacation places. A friend of my family has a furnished beach side condo in NJ which she rents for anywhere of $1500! to $2200! for a week during the summer which includes utilities. She basically covers her mortgage with three months summer rental and then gets to hang out there during the off season. Alot of that also happens on the SE USA Gulf Coast condos too…

do you REALLY want to risk getting locked out of your accommodations during your vacation? i can think of few things that would ruin it faster.
i would prefer to spend the few extra bucks and consider it insurance
or check with a vacation rental agency. i’d bet they have to be insured and offer some guarantee to be able to be in business

If the vacation rental is managed by a management company, then you should be ok — they’ll move you to another house if they one you are checking into isn’t available (99.9% of the time, they’ll even go to a competitor if they don’t have one in stock themselves).

If it’s RBO (rental by owner), then you’re SOL if the house isn’t available. Sure, you can get your money back… (likely) after you sue them. Not to mention the extra expenses you’ll rack up once you arrive and find out you don’t have anywhere to stay.

Anytime you rent from a management company, make sure they are members of vrma.org.

One more note: Here in North Carolina, if a vacation rental is sold, the new owners have to agree to any existing rentals that will occur in under 180 days. This being the case, the bank would have to honor your lease.

That only applies if home is managed by a professional rental management company, and only applies to NC. But it might be something for you to check into out in LV.